Coffee prices: Customers to pay the price for supply chain havoc

Your daily cuppa is about to cost you more.

Your daily cuppa is about to cost you more. Photo: TND/Getty

The price of your takeaway coffee is set to go up as supply chain issues wreak havoc for Australian importers.

Natural disasters, shipping container price surges, and pandemic-induced supply chain complications have pushed up prices for importers by up to 40 per cent.

And although local roasters have been absorbing the higher costs so far, they said it’s only a matter of time until they have to pass them on to consumers.

Brazil is the world’s largest supplier of coffee beans and accounts for about 40 per cent of global supply.

In July, the country lost 10 per cent of its crop after experiencing the most severe frosts since 1994.

Its difficulties have played a major role in driving coffee prices to a seven-year high and have been compounded by surging shipping costs.

Fleur Studd, founder and director of coffee importers Melbourne Coffee Merchants, said container prices had risen from $US3000 ($4092) to $US12,000 ($16,370) per container.

As a result, over the past nine months her company has been paying 10 to 40 per cent more than usual to import coffee beans, depending on the country of origin and individual producers.

She said costs had become “astronomical” despite the best efforts of suppliers to stabilise them.

Ms Studd’s importing company has consequently hiked the price it charges Australian roasters by 20 per cent. But her Melbourne cafe chain, Market Lane Coffee, has not yet lifted its prices.

And neither has Adelaide-based Elementary Coffee – though founder Brad Nixon said that could soon change.

“Your $4 cup of coffee is definitely gonna be a thing of the past very shortly,” he said.

Mr Nixon said his company has already raised wholesale prices by up to $2 per kilo, with some importers spending an extra $60,000 a year on shipping containers.

Homegrown not a solution

Local goods have been in high demand during the pandemic, but Australian coffee beans aren’t enjoying the same benefits.

Cafe Culture magazine managing director Sean Edwards said Australian coffee has a big market overseas as a “novelty”, but represents just 0.85 per cent of the coffee consumed locally and would take a long time to ramp up.

“If we plant the coffee tomorrow, it takes 10 years to have a crop,” he said.

Ms Studd said limited access to high altitudes in the country could also potentially limit the quality of Australian coffee. And she said labour costs were prohibitive.

“Coffee is very labour intensive, and great coffee is typically hand-picked,” she said.

“In Australia, because the cost of labour is so high, it’s just practically impossible to do that.

“So it’s all machine-picked, [which] has an impact on the quality of coffee that we can produce.”

Despite the potential difference in quality, the cost of Australian coffee is about “10 times higher” than coffee imported from the likes of Brazil and Colombia, she said.

But Ms Studd said the price hikes of imported coffee could have a positive byproduct: Delivering higher returns for producers.

“Obviously, instability in coffee pricing isn’t ideal,” she said.

“But [producers] getting a higher return for the coffee that they’re producing is a really good thing.”

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